Long Term Techniques - 3-5 years

Creating a No Money Down deal gets easier the longer you own the property. That's because time for growth in the market value occurs, and your asset can be revalued.

Eventually, price growth through the years means that ALL property can be a No Money Down deal if that's your intention!

In general we are talking about a 3-5 year period of growth prior to refinancing. Property price growth in the 60 years since the Second World War has averaged about 8% pa in the UK.

However, the Government is currently forecasting an average growth of 5.5% pa for the next few years, which would be a conservative approach. What does this mean for growth over 3 and 5 years?

Three year potential growth - 17.4% compounded

Five year potential growth - 30.7% compounded

Example:

You completed a Low Money Down deal based on the following numbers for a New build property:

	Original Financing	Refinance at 3 years	Comment
Market Value	£150,000	£176,100	3 years at 5.5% growth
Purchase Price	£112,500
Mortgage	£97,500		Deposit bridged, max 65% original lending on New build
Cash for equity contribution	£15,000
Fees	£7,500
Refinance		£123,200	70% on market value
Cash contributed	£22,500
Amount to repay mortgage and withdraw cash		£120,000	£97,500 + £22,500
Cash out of deal		£3,200	Left over!

This refinancing can also be used in the event that you have invested using the Axis 85% commercial facility. This is structured as a fixed three year interest rate with the intention that you refinance elsewhere afterwards.

The growth in market value over the three year period is anticipated to be enough to enable 70% lending to replace the 85% facility - giving you the funds to repay and a new mortgage at a lower interest rate.

Clearly the refinancing can take place at any time you like when the figures stack up to release equity. Should prices be rising strongly, many investors choose to refinance every few years and use the cash released to assist with funding the growth of their portfolio.

Summary

We've taken an in-depth look at all aspects of completing Low and No Money Down property investments. You should now:

Know what Low and No Money Down Deals are
Appreciate the benefits and the risks of NMD
Understand that LMD is a low risk technique that balances excellent returns with modest investment
Decide which technique is for you (or maybe both)
Understand how they work
Be ready for the next steps in developing your property portfolio

In closing Axis would like to offer a few words of advice:

1. The financial markets change continually. Please don't assume that everything you have just read is set in stone. No doubt the moment you finishing reading this something will have changed, and we don't promise to keep the contents completely up to date.

Make sure that you check the current situation before moving ahead with a No Money Down deal.

2. The legal situation is all important. You can complete No Money Down deals completely legally, that's what you should aim for. Make sure you understand exactly what you are being asked to sign and take legal advice where appropriate.

3. No Money Down techniques require a lot of knowledge and experience, both in negotiating and structuring the deal and then following it through to completion. Work with an expert like Axis Property Investment who has been working with these transactions for many years and really knows how to make them work easily and smoothly.

4. Balance the benefit of buying property with little or no cash, with the understanding that it will probably mean negative cashflow for the first few years. That's fine if you factor it into the deal, it's terrible if you don't and later on you run out of money.

Make sure you have sufficient in reserve to stay liquid and to cope with voids or unforeseen expenses.